Home Sweet Home Team's Real Estate Blog

Posts Tagged ‘selling’

CALGARY – Calgary will experience a “very active” spring housing market as an improved economic outlook combined with record low interest rates and affordable housing are “fuelling recovery” in residential real estate sales, says a report released today by Re/Max.

“The supply of detached homes is beginning to tighten, with multiple offers becoming more prevalent in hot pockets throughout the city, particularly well-priced, entry-level product,” said the Re/Max Market Trends Report 2010.

“First-time buyers continue to drive the market, looking to take advantage of greater affordability before the window of opportunity closes.”

The report said that while the average price is still off peak 2007 levels it continues its ascent rising seven per cent in the single-family category to $441,217 and four per cent in the condo category to $282,639 over January 2009 levels.

“There has been a notable push by purchasers to get in before predicted interest rate hikes and tighter lending criteria,” said the report. “To that end, buyers are being more cautious in their pursuits, deliberately choosing not to max out debt service ratios, with a trend towards more modest pursuits that can be afforded. The market is picking up at all levels, with move-up buyers increasingly active.”

The Re/Max report, which looked at 16 markets across the country, noticed a sharp decline in active listings. A lack of inventory will be the greatest challenge facing housing markets across Canada this spring, it said.

That, combined with the threat of higher interest rates, tighter lending criteria, and in British Columbia and Ontario the introduction of the new Harmonized Sales Tax, have clearly served to kick-start real estate activity “prompting an unprecedented influx of purchasers.”

“Affordability is the catalyst for the vast majority of purchasers in today’s housing market,” said Elton Ash, regional executive vice president for Re/Max of Western Canada. “While homeownership is still within reach in many major centres, levels are slipping. There is a growing sense, on both sides of the fence, that the time to act is now.”

Ash said the real estate market has experienced a 180-degree turnaround from this time last year.

“It’s clear that real estate from coast to coast has roared back to life and markets are once again firing on all cylinders,” said Ash. “The vast majority of markets are now recovered.”

The Federal Government has taken some steps to protect consumers buying homes now so they
will be able to make payments when rates go back to their long term average of about 6%.

Highlights – Not Much Has Changed:
1. All borrowers will qualify at the 5 year rate – from 3.79% to 4.09% – which is where we
have been qualifying buyers for the last 4 years anyway.
2. People refinancing can only withdraw a maximum of 90% of the appraised value of their
home. Most of our refi’s are at 80% so this does not affect most of our clients.
3. 20% down is now needed for investment properties that are not owner-occupied. Most
clients put 20% down anyway so this does not change much for investors either.
4. Amortization period and down payment remain unchanged at 35 years max and 5% down

The Detailed Version – Government of Canada Takes Action

“Canada’s housing market is healthy, stable and supported by our country’s solid economic
fundamentals,” said Minister Flaherty. “Our Government is acting to help prevent Canadian
households from getting overextended, and acting to help prevent lenders from facilitating it.”
The Government will therefore adjust the rules for government-backed insured mortgages
as follows, and are effective April 19, 2010:

1. Require that all borrowers meet the standards for a five-year fixed rate mortgage even if
they choose a mortgage with a lower interest rate and shorter term. This initiative will
help Canadians prepare for higher interest rates in the future.
2. Lower the maximum amount Canadians can withdraw in refinancing their mortgages to
90 per cent from 95 per cent of the value of their homes. This will help ensure home
ownership is a more effective way to save.
3. Require a minimum down payment of 20 per cent for government-backed mortgage
insurance on non-owner-occupied properties purchased for speculation.

Mark noted the above in the Calgary Sun a few weeks ago. See attached.
Rates
• 5-year, fixed rates now range between 3.79% and 4.09% – the lowest in about 70 years.
• Variable rates are Prime-0.35%, or 2.25% – .35% = 1.90% AND you can lock-in at best
bank rates before rates go up. Banks lock you in at Posted – 1% = 5.65% -1% = 4.65%!

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Calgary Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.